Now it is the case that all entrepreneurs have to register the sales tax with the tax office and transfer the difference between the sales tax paid and the sales tax received. This then looks step by step as follows:
- The entrepreneur has received sales tax of EUR 9.90 from the supplier and transfers this amount to the tax office.
- The supplier receives the tax he has already paid from the carpenter, because he pays sales tax at 13.30. Since he already paid 9.90 (input tax), he can deduct this amount. He then only has to pay the tax office EUR 3.40.
- The carpenter also receives the sales tax he has paid – namely from the end consumer. This pays the carpenter 28.50 euros. Here, too, the difference is calculated: 28.50 – 13.30 = 15.20 euros. Using the sales tax calculator is essential there.
In the end, all entrepreneurs got their sales tax back and were not taxed. Therefore, the sales tax is considered traffic control. The term indirect tax is also applicable, since the tax debtor (consumer) and the economic burden are not identical.
The sales tax rates in Germany are 19 and 7% respectively
If we now summarize the individual amounts in the value chain, it becomes clear that the entire tax burden lies with the consumer:
9.90 + 3.40 + 15.20 = 28.50 euros
This is why sales tax can also be referred to as consumption tax . From a business perspective , the amounts to be transferred are as follows:
- from the entrepreneur 9.90 euros
- from the supplier 3.40 euros (the carpenter billed 13.30 minus input tax 9.90 euros)
- from the carpenter 15.20 euros (the end user billed 28.50 minus input tax 13.30 euros)
- The state or the federal states therefore earn money at every step in the value chain. 53.9% of the sales tax goes to the federal government, 44.1% to the states and 2% to the municipalities.
What does the sales tax law say?
Everything about the sales tax liability governs Added Tax Act (VAT Act). According to § 1 UStG, all deliveries made by companies in Germany against payment with the company are taxed. The same applies to imports and intra-community acquisitions.
An intra-community acquisition is when goods are exchanged between two member states (EU) for a fee. In this context, remuneration means all expenses and services that are incurred in order to receive the goods, minus sales tax.
According to 2 UStG, an entrepreneur is someone who pursues commercial or professional activities independently. It doesn’t matter whether the company is making a profit. In contrast, an activity is not carried out independently if a natural person is so integrated into a company that they have to follow instructions. According to 12 UStG the standard tax rate is 19%. According to 10 UStG, the fee forms the assessment basis for sales tax.